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NO. 24. AN ACT RELATING TO HEALTH INSURANCE AND FEDERAL LAW.

(H.355)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 8 V.S.A. 4062b is added to read:

4062b. COMPLIANCE WITH FEDERAL LAW

Except as otherwise provided in this title, health insurers, hospital or medical service corporations, and health maintenance organizations that issue, sell, renew or offer health insurance coverage in Vermont shall comply with the requirements of the Health Insurance Portability and Accountability Act of 1996, as provided in Title XXVII Part A, Subpart 3, Section 2722 of the Public Health Service Act. The commissioner shall enforce such requirements pursuant to his or her authority under this title.

Sec. 2. 8 V.S.A. 4080a(a)(1) is amended to read:

(1) "Small employer" means an employer who, on at least 50 percent of its working days during the preceding calendar quarter, employs at least one and no more than *[49]* 50 employees. The term includes self-employed persons. Calculation of the number of employees of a small employer shall not include a part-time employee who works less than 30 hours per week. The provisions of this section shall continue to apply until the plan anniversary date following the date the employer no longer meets the requirements of this subdivision.

Sec. 3. 8 V.S.A. 4080a(g) is amended to read:

(g) For a 12-month period from the effective date of coverage, a registered small group carrier may limit coverage of preexisting conditions which exist during the *[12-month]* six-month period before the effective date of coverage; provided that a registered small group carrier shall waive any preexisting condition provisions for all new employees or members of a small group, and their dependents, who produce evidence of continuous health benefit coverage during the previous nine months substantially equivalent to the common health care plan of the carrier approved by the commissioner. Credit shall be given for prior coverage that occurred without a break in coverage of 90 days or more.

Sec. 4. 8 V.S.A. 4080b(g) is amended to read:

(g) For a 12-month period from the effective date of coverage, a registered nongroupcarrier may limit coverage of preexisting conditions which exist during the 12-month period before the effective date of coverage; provided that a registered nongroup carrier shall waive any preexisting condition provisions for all individuals, and their dependents, who produce evidence of continuous health benefit coverage during the previous nine months substantially equivalent to the common health care plan of the carrier approved by the commissioner. If an individual has a preexisting condition excluded under a subsequent policy, such exclusion shall not continue longer than the period required under the original contract, or 12 months, whichever is less. Credit shall be given for prior coverage that occurred without a break in coverage of 63 days or more. For an eligible individual, as such term is defined in Section 2741 of Title XXVII of the Public Health Service Act, a registered nongroup carrier shall not limit coverage of preexisting conditions.

Sec. 5. ADOPTION OF ADMINISTRATIVE RULES

(a) The commissioner shall adopt rules for health insurance companies doing business in this state in conformance with the requirements of the federal Health Insurance Portability and Accountability Act of 1996, and the requirements of Vermont law. Such rules shall include provisions enforcing the requirements of:

(1) Title XXVII - Part A, Subpart 1- Portability, Access, and Renewability Requirements, including Section 2701 (increased portability through limitation on preexisting condition exclusions), Section 2702 (prohibiting discrimination against individual participants and beneficiaries based on health status), Section 2711 (guaranteed availability for employers in the group market), Section 2712 (guaranteed renewability of coverage for employers in the group market), and Section 2713 (disclosure of information); and

(2) Title XXVII - Part A, Subpart 3 - Exclusion of Plans; Enforcement; Preemption.

(b) The rules of the commissioner adopted under this section shall include such rules as are necessary to carry out an acceptable alternative mechanism and such other requirements pursuant to Subtitle B - Individual Market Rules, Title XXVII of the Public Health Service Act.

(c) The governor or his or her designee shall notify the United States Secretary of Human Services that Vermont has enacted individual health care reform under 8 V.S.A.

4080b that qualifies as an acceptable alternative mechanism pursuant to Section 2744 of the federal Health Insurance Portability and Accountability Act of 1996, and shall seek approval of Vermont law as an alternative mechanism.

Sec. 6. LEGISLATIVE INTENT

This act is intended, and shall be construed:

(1) to enable the commissioner of banking, insurance, securities, and health care administration to enforce the provisions of the federal Health Insurance Portability and Accountability Act of 1996, which establishes minimum standards for group and individual health insurance;

(2) to amend Vermont’s health insurance laws to the extent that a Vermont standard or requirement prevents the application of a requirement of federal law; and

(3) to preserve those provisions of Vermont’s health insurance laws that provide greater protection to Vermonters than federal law.

Sec. 7. EFFECTIVE DATE

This act shall take effect on passage, except that Sec. 1, Sec. 2, Sec. 3 and Sec. 4 shall take effect on July 1, 1997.

Approved: May 6, 1997